1. Field of the Invention
The present invention relates to a dealer vehicle inventory ordering system. More specifically, the present invention relates to a computer and Internet implemented system and method for recommending what models and features of new and used vehicles should be periodically ordered by a dealer to meet periodic market demand.
2. Description of the Related Art
New and used vehicle automotive dealers are continually challenged to keep a sellable inventory of cars, trucks, and vans on their lots, while holding the costs of doing so to a bare minimum. The old sale axiom that “you can't sell what you don't have” is particularly applicable to automotive dealerships. Thus, a large inventory of a wide variety of vehicles increases the likelihood of having a vehicle that any particular customer may be willing to buy on any given day. However, the cost of maintaining a large inventory intended to satisfy the day to day demands of automotive customers quickly becomes prohibitive as the quantity of vehicles increases. More problematic is the situation where a dealer has vehicles in the inventory that nobody wants to buy.
Automotive dealers employ various financing strategies to cover the cost of maintaining an inventory of vehicles on their lots. This cost is typically referred to as the “floor plan” cost. Dealers may obtain floor plan financing from a new vehicle manufacturer, a bank, or other financial sources. The floor plan cost to the dealer increases as number and duration of vehicles remaining in inventory increases. Thus, every dealer has a strong preference to obtain only those vehicles that will sell quickly, thereby holding floor plan costs at comparatively low levels. Typically, dealers seek to turn all inventory within thirty days, some may tolerate forty-five or sixty days. In all cases, there comes a point in time when a vehicle is classified as “over-aged.” When a vehicle becomes over-aged, the dealer will employ aggressive tactics to “move” the vehicle, such as sales incentives, brokered sales, or others. It is axiomatic that the best way to avoid over-aged inventory is to order only those vehicles models with options and colors that are likely to sell quickly.
It is a craft, and indeed an art, for a dealer to select and order new and used vehicles that will sell quickly, while still maintaining a sufficient inventory so as not to miss potential sales due to lack of inventory. Typically, dealers assess inventory levels and order additional vehicles on a weekly basis. With respect to new vehicle orders, the process is complicated by the fact that the dealer will not necessarily get every vehicle ordered due to certain manufacturer allocation processes. The dealer places an order, and then waits for an acknowledgement of inbound inventory from the manufacturer. Inbound inventory is further characterized by the expected arrival time at the dealership, typically aged as 60-days inbound; 30-days inbound; and so forth. Thus, the total number of vehicles available to a dealer includes the physical inventory on the lot and the inbound inventory expected over the subsequent 60-day period.
Motor vehicle dealerships manage a great deal of data with respect to the inventory of vehicles, sales transactions, parts, financing, staff, and so forth utilizing Reynolds & Reynolds (hereinafter “R&R”), ADP, and other Dealer Management Systems. The management processes are administered using computer based software applications, with two providers dominating the industry. These are R&R and ADP, both of which are familiar to those skilled in the art. R&R and ADP software both provide sales history database that can be accesses and analyzed by the dealer during the vehicle ordering process. Indeed, prior sales transactions made by the dealer are useful indicators as to what future sales might be. However, sales history does not necessarily predict seasonal and periodic changes in buying habits and trends in the market. Furthermore, the dealer's sales history database contains information only on sales by that particular dealer. Another resource available in the vehicle ordering process is the manufacturer's fast turn report. This report describes what vehicles are selling quickly, by model, color, preferred equipment group, and etc. While useful, fast turn reports are based on national or wide area zone level trends, and are based on vehicles allocated by the manufacturer.
Each dealership tasks a management individual or a team of individuals who are responsible for practicing the “craft” of predicting customer buying trends and desires, and who order vehicles to meet the expected need. They rely upon the sales history database, the manufacturer fast-turn reports, certain third party market barometers, and their gut-level instincts about what will sell in the near term. Thus, it can be appreciated that there is a need in the art for a system and method of predicting new and used vehicle sales trends useful for managing floor plan costs at the dealership level while reasonably insuring that market demands are met.